Meg's employer carries insurance on its employees that will pay an employee his or her regular salary while the employee is away from work due to illness.The premiums for Meg's coverage were $1,200.Meg was absent from work for two months as a result of a kidney infection.Meg's employer's insurance company paid Meg's regular salary of $8,000 while she was away from work.Meg also collected $2,000 on a wage continuation policy she had purchased. Meg is not taxed on any of the above amounts.

Question

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The $8,000 paid by the employer's insurance is taxable because the premiums were paid by the employer. However, the $2,000 from Meg's personal policy is not taxable since she paid the premiums herself.

Meg's Employer Carries Insurance on Its Employees That Will Pay